Fears over e-health budget blind-spot

Experts have warned that unless a financial shortfall in electronic health funding is addressed in the federal budget today, the government will be wasting billions of dollars.

Health Minister Nicola Roxon is expected to announce today an agreement with pharmaceutical manufacturers to slash $1.86 billion from the government’s medicine bill over the next five years in return for greater certainty in drug pricing.

The move is designed to make room in the budget to fund health reforms. There is speculation the budget will allocate about $2 billion for the primary healthcare sector, including e-health.

But reports into the return on investment of a comprehensive e-health program estimate it could very well pay for itself by 2015.

A report by consultancy Booz & Company, obtained by The Australian Financial Review in April and released last week, showed e-health measures could shave well over $7 billion a year off healthcare costs nationwide by 2020 – $2.7 billion a year just by implementing an electronic medication management system.

Report author Chris Bartlett said $2 billion in funding would not be sufficient.

“Indications are that would be inadequate," he said. “When you look at other e-health programs in Canada and Germany for example, there is a fair range in cost, but typically you’re looking at between $200 and $400 per capita.

“If you extrapolate that out, it’s something between $4 billion and $8 billion."

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Mr Bartlett said Australian general practitioners were some of the most advanced in the world in terms of their use of information technology and that would mean the cost of implementing e-health was likely to be at the lower end.

Today, 95 per cent of Australia’s general practitioners use computerised records, compared with 46 per cent in the US.

Moreover, he projected proper investment in e-health initiatives now could expect to “break even" within five years. “Beyond that you would be getting much greater returns on investment," he said.

But he said the Rudd government would still need to commit a minimum spend of $4 billion on e-health over the next five years. And that $4 billion figure has been echoed by industry as well.

Gary Cohen
, chief executive of Australian healthcare IT vendor
iSOFT Group
, had previously criticised the federal government for failing to outline an over-arching strategy for e-health.

But he said he was hopeful this budget would deliver a clearer plan for investment in transforming the sector, and in IT particularly, as an enabler of that change.

“From the noises that are being made, the government is obviously viewing health as an important part of its agenda," he said.

Mr Cohen said IT would underpin other investments and drive savings and efficiencies across the healthcare sector.

Public consultation on the regulatory support for the government’s healthcare identifiers service, which would create unique health identifier numbers for all Australians and underpin future e-health programs, closed in April.

Mr Cohen said the implementation of a health-identifier regime was important and he was optimistic once this foundation had been laid, more substantive investments could follow.

“To facilitate change you need the right framework," he said. “Without that framework it is difficult to expect future e-health initiatives would be able to have their full impact."

However, since the end of the public consultation period on the identifier numbers, more recent announcements about healthcare plans have conspicuously lacked an e-health dimension.

Public sector analyst at research house Ovum, Steve Hodgkinson, said the lack of any substantial action in the e-health area so far in 2010 was a point of concern.

“E-health needs to come back onto the agenda," he said.

He added that the recent absence of e-health announcements indicated to him that the government had yet to resolve how to invest in the area.

Mr Hodgkinson said the most recent decisions that emerged from the April meeting of the Council of Australian Governments had pushed operational decision-making back out onto the local hospital networks and primary care organisations – a move that ran the risk of further dividing an already fragmented system.

“Everybody knows a piece-by-piece approach is not a good idea," he said. “E-health nationally needs to be driven as a standards-based coordinated structure.

“But the actual decision-making has again been pushed out to state and territory governments and those networks."

He anticipated the budget would include a “lack of funding" to drive the national standards-based approach to the health record and some standardised solutions that could then be deployed into local hospital networks and primary healthcare organisations.

Mr Hodgkinson said the government needed to stay focused on creating a solid foundation of standards and investing in core systems.

“The challenge is to find that sweet spot of standards-based infrastructure solutions, which deliver solid core minimum inter-operability, but no more," he said.

“If you try and deliver more than that you run the risk of failing the whole lot and that’s the trouble they keep getting themselves into.